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EXHIBIT 10
FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment to Credit Agreement dated as of August 31st, 1998 by
and between TALON AUTOMOTIVE GROUP, INC., a Michigan corporation ("TAG'), VELTRI
METAL PRODUCTS CO, a Nova Scotia corporation ("Veltri") (Veltri, called together
with TAG, the "Borrowers"), the Banks party hereto, and COMERICA BANK, a
Michigan banking corporation, as agent for the Banks (in such capacity,
"Agent").
WHEREAS, Borrowers, Agent and the Banks entered into a certain Credit
Agreement dated as of April 28, 1998 ("Agreement"), pursuant to which Borrowers
incurred certain indebtedness and obligations and granted the Agent, on behalf
of the Banks, certain security for such indebtedness and obligations; and
WHEREAS, Borrowers, Agent and Banks desire to amend certain provisions of
the Agreement on the terms and conditions hereof:
NOW, THEREFORE, it is agreed:
A. DEFINITIONS
1. Capitalized terms used herein and not defined to the contrary have
the meanings given them in the Agreement.
B. AMENDMENT
1. Clause (a) of Section 1.11 of the Agreement is hereby amended and
restated as follows:
(a) in the case of the Swing Loan, the Prime-based Rate, or such
other rate of interest that the Agent or Canadian Swingline
Lender (as applicable) in its sole discretion quotes to TAG or
Veltri for the relevant Advance for such period as Agent or the
Canadian Swingline Lender is willing (in its sole discetion) to
offer such rate of interest for such Advance."
2. Section 1.12 of the Agreement is hereby amended by deleting
therefrom, the last sentence thereof, which presently reads as
follows:
"Notwithstanding anything to the contrary herein, the
Applicable Margin shall be based on a Level III Leverage Ration
until it is adjusted based on the financial statements of
Borrowers for the Borrower's fiscal quarter ending October 3,
1998.
3. Section 1.16 of the Agreement is hereby amended and restated in its
entirety as follows:
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"1.16 'Borrowing Base' shall mean, as of any date, the sum of:
(a) eighty five percent (85%) of the value of Eligible
Accounts Receivable, plus
(b) fifty percent (50%) of the value of Eligible
Inventory, plus
(c) the lesser of Fifteen Million Dollars ($15,000,000) or
fifty percent (50%) of the Eligible Tooling Invoices,
plus
(d) seventy five percent (75%) of the fair market value of
Eligible Real Estate, to the extent Agent has obtained
an appraisal in form and content satisfactory to Agent
for such Eligible Real Estate, plus
(e) the greater of (i) seventy five percent (75%) of the
orderly liquidation value of eligible Equipment, to
the extent Agent has obtained (within 24 months of the
date of calculation of such amount) an appraisal in
form and content satisfactory to Agent for such
Eligible Equipment, or (ii) sixty five percent (65%)
of the net book value (adjusted quarterly upon the
delivery of financial statements) of Eligible
Equipment for which (y) Agent has not obtained an
appraisal satisfactory to Agent, or (z) Agent has an
appraisal that is (as of the date of calculation of
the Borrowing Base) greater than twenty-four (24)
months old; provided, however that with respect to
Eligible Equipment acquired in connection with a
Permitted Acquisition, (A) only fifty percent (50%) of
the net book value thereof shall be included in the
Borrowing Base until Agent has obtained an appraisal
thereof in form and content satisfactory to Agent, (B)
the net book value of such assets will be the higher
of the net book value immediately prior to such
Permitted Acquisition or immediately after such
Permitted Acquisition, and (C) so long as the value is
determined by reference to the net book value of such
assets, the Borrowers shall depreciate such assets in
accordance with GAAP."
4. Section 1.29 of the Agreement is hereby amended and restated in its
entirety as follows:
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"1.29 "EBITDA" shall mean, as the last day of any fiscal quarter,
Net Income plus the aggregate amounts deducted in determining Net
Income for such period in respect of taxes based on income, Michigan
single business tax, interest expense and depreciation and
amortization, all determined in accordance with GAAP determined in
the following described manner during the periods mentioned below:
(i) with respect to any calculation of EBITDA as of April
4, 1998, by multiplying EBITDA calculated for the
quarter then ended by four (4);
(ii) with respect to any calculation of EBITDA as of the
end of the fiscal quarter of Borrower ending July 4,
1998, by multiplying two (2) by the sum of (x) EBITDA
for the two quarter period then ended plus (y) in each
case, other than for the determination of the Leverage
Ratio for the purpose of establishing the Applicable
Margin, the amount of One Million Six Hundred Thousand
Dollars ($1,600,000);
(iii) with respect to any calculation of EBITDA as of the
end of the fiscal quarter of Borrower ending October
3, 1998, by multiplying four thirds (4/3) by the sum
of (x) EBITDA for the three quarters then ended plus
(y) in each case, other than for the determination of
the Leverage Ratio for the purpose of establishing the
Applicable Margin, the amount of Three Million Seven
Hundred Thousand Dollars (3,700,000);
(iv) with respect to any calculation of EBITDA as of the
end of the fiscal quarter of Borrowers ending December
31, 1998 by adding (x) the EBITDA for the rolling four
quarter period then ended and (y) in each case, other
than for the determination of the Leverage Ratio for
the purpose of establishing the Applicable Margin,
Three Million One Hundred Thousand Dollars
($3,100,000);
(v) with respect to any calculation of EBITDA as of the
end of the fiscal quarter of Borrowers ending April 3,
1999 by adding (x) EBITDA for the rolling four quarter
period then ended and (y) in each case, other than for
the determination of the Leverage Ratio for the
purpose of establishing the Applicable Margin, Two
Million Five Hundred Thousand Dollars ($2,500,000);
(vi) with respect to any calculation of EBITDA as of the
end of the fiscal quarter of Borrowers ending July 3,
1999 by
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adding (x) EBITDA for the rolling four quarter period
then ended and (y) in each case, other than for the
determination of the Leverage Ratio for the purpose of
establishing the Applicable Margin, One Million Nine
Hundred thousand Dollars ($1,900,000), and
(vii) with respect to any subsequent determination thereof,
on a rolling four quarter basis,
provided, however, solely for the purpose of calculating
Leverage Ratio during any four quarter period during which a
Permitted Acquisition has occurred (x) EBITDA determined for
the entity or business acquired in such Permitted
Acquisition (without any annualization pursuant to clauses
(i) through (iii) above) shall be included in the
calculation hereof, as if such Permitted Acquisition
occurred on the first day of such four quarter period, and
(y) any Permitted Adjustments related to a Permitted
Acquisition shall be added back during the rolling four
quarter period which includes the date of the Permitted
Acquisition."
5. The following subsection is hereby added to Section 1.61 of the
Agreement immediately after subsection (b) thereof:
"(c) in the case of any Swing Loan made pursuant to a
quoted rate and interest period offered a Borrower by
Agent or the Canadian Swingline Lender (as applicable)
such period offered by Agent or the Canadian Swingline
Lender therefore (in its sole discretion)."
6. Section 1.82 of the Agreement is hereby amended and restated in its
entirety as follows:
"1.82 'Net Income' shall mean, for any period of any
determination thereof the net income before extraordinary
items (reduced by the amount of any dividend paid during
the period of determination pursuant to clause (b) of
Section 10.5 hereof) all determined in accordance with
GAAP; provided, however, with respect to any calculation of
Net Income which includes the fiscal quarter ended July 4,
1998, there shall be added back to Net Income: (i) the
special deferred compensation charge in the amount of One
Million Three Hundred Fifty Nine Thousand Dollars
($1,359,000), and (ii) the deferred foreign exchange loss
in the amount of Six Hundred Five Thousand Dollars
($605,000) in each case, as shown on the Borrower's
financial statements for such fiscal quarter."
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7. Section 1.84 of the Agreement is hereby amended and restated as
follows:
"1.84 'Net Worth' shall mean, as of any date, the amount of
any capital stock, paid in capital or similar equity
accounts plus (or minus in the case of a deficit) the
capital surplus and retained earnings of such Person
(excluding the effect of any foreign currency translation
adjustments) less treasury stock, all as determined in
accordance with GAAP."
8. Subsection (c) of Section 10.4 of the Agreement is hereby amended
and restated in its entirety as follows:
"(c) the Net Worth to be less than the sum of (i) negative
One Million Five Hundred Thousand Dollars
(-$1,500,000) plus (ii) fifty percent (50%) of Net
Income for each quarter of Borrowers in which Net
Income is positive amount commencing the quarter ended
April 4, 1998, plus (iv) one hundred percent (100%) of
Net Proceeds of the Initial Public Offering."
9. Subsection (a) of Section 10.5 of the Agreement is hereby amended
and restated in its entirety as follows:
"(a) dividends payable during TAG's 1998 fiscal year, in
aggregate amount not in excess of Eleven Million Five
Hundred Sixty Two Thousand Dollars ($11,562,000)."
10. Section 11.11 of the Agreement is hereby amended and restated in its
entirety as follows:
"11.11 Exercise of Remedies. If an Event of Default
has occurred and is continuing hereunder:
(a) Agent may, and upon the written direction of the
Majority Banks, Agent shall, terminate Banks'
commitment to make Advances and Agent's
commitment to issue Letters of Credit;
(b) Agent may and upon the written direction of
the Majority Banks, Agent Shall: (i) declare
the entire unpaid balance of the indebtedness
hereunder, including the Notes, immediately due
and payable, without presentment, notice or
demand, all of which are hereby expressly
waived by Borrower, and/or (ii) require the
payment by Borrowers into a restricted demand
deposit account with Agent of an
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amount equal to the undrawn face amount of
any outstanding Letters of Credit; and
(c) Immediately and automatically upon the
occurrence of any Event of Default specified in
Subsection 11.6 above, and notwithstanding the
lack of any declaration by Agent under preceding
clause (b), the entire unpaid principal of the
Loans and other indebtedness hereunder,
including the Notes, shall become automatically
due and payable;
(d) Agent may, and upon the written direction of the
Majority Banks, Agent shall, on behalf of all
Banks, exercise any remedy permitted by this
Agreement, the other Documents or law.
11. Section 12.11 of the Agreement is hereby amended and restated in its
entirety as follows:
"12.11 Authority of Agent to Enforce Notes And This
Agreement. Each Bank, subject to the terms and conditions of
this Agreement, authorizes the Agent with full power and
authority as attorney-in-fact to institute and maintain
actions, suits or proceedings for the collections and
enforcement of the Notes, this Agreement and the Documents
(or any of them) and to file such proofs of debt or other
documents as may be necessary to have the claims of the
Banks allowed in any proceeding relative to the Borrowers or
its creditors or affecting its properties, and to take
such other actions which Agent considers to be necessary or
desirable for the protection, collection and enforcement of
the Notes, this Agreement or the Documents (or any of them).
The Banks hereby agree to indemnify Agent for any and all
actions taken by Agent at the direction of the Majority
Banks."
12. Subsection (a) of Section 13.8 of the Agreement is hereby amended by
adding the following subparagraph (vi):
"(vi) change the definition of "Majority Banks" or
otherwise change the Percentage required to take or
authorize any action hereunder;"
13. Subsection (i) if Section 13.10 of the Agreement is hereby amended
and restated in its entirety as follows:
"(i) the aggregate of all consideration which constitutes
interest under applicable law that is contracted for, taken,
reserved,
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charged or received by Agent or such Bank under the Notes
payable to Agent or such Bank, this Agreement, the Documents
or under any other agreement entered into in connection with
or as security for or guaranteeing this Agreement or such
Notes or Documents shall under no circumstances exceed the
Highest Lawful Rate and any excess shall be credited
automatically, if therefore paid, on the principal amount of
Loans owed to such Agent or Bank or, if it has no Loans
outstanding, shall be refunded to Borrower by such Bank,"
C. REPRESENTATIONS
Borrowers hereby represents and warrants that:
1. Execution, delivery and performance of this Amendment and any other
documents and instruments under this Amendment or the Agreement are
within Borrowers' powers have been duly authorized, are not in
contravention of law or the terms of Borrowers' Articles of
Incorporation or Bylaws, and do not require the consent or approval
of any governmental body, agency, or authority.
2. This Amendment, and the Agreement as amended by this Amendment, and
any other documents and instruments required under this Amendment or
the Agreement, when issued and delivered under this Amendment or the
Agreement, will be valid and binding in accordance with their terms.
3. The continuing representations and warranties of Borrowers set forth
in Sections 8.1 through 8.7 through 8.19 of the Agreement are true
and correct on and as of the date hereof with the same force and
effect as made on and as of the date hereof.
4. The continuing representations and warranties of Borrowers set forth
in Section 8.8 of the Agreement are true and correct as of the date
hereof with respect to the most recent financial statements
furnished to Bank by Borrowers in accordance with Section 9.1 of the
Agreement.
5. To the best of Borrowers' knowledge, no Event of Default, or
condition or event which, with the giving of notice or the running
of time, or both, would constitute an Event of Default under the
Agreement, has occurred and is continuing as of the date hereof.
D. MISCELLANEOUS
1. This Amendment may be executed in as many counterparts as
Agent, Banks and Borrowers deem convenient and shall be deemed have
become effective as of July 4, 1998 upon satisfaction of the
following conditions:
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(a) delivery to Agent of counterparts hereof executed by each of the
parties; and (b) delivery by Borrowers to Agent, in form and
substance satisfactory to Agent and the Banks, of each of the
documents and instruments listed on the Checklist attached as
Exhibit "A" hereto.
2. Borrowers, Agent and the Banks acknowledge and agree that, except as
specifically amended and/or waived herein and hereby, all of the
terms and conditions of the Agreement and the Loan Documents, remain
in full force and effect in accordance with their original terms.
3. Borrowers shall pay all of Agent's legal costs and expenses
(including attorneys' fees and expenses) incurred in the
negotiation, preparation and closing hereof, including, without
limitation, costs of all lien searches and financing statement
filings.
4. Except as specifically set forth herein, nothing set forth in this
Amendment shall constitute, or be interpreted or construed to
constitute, a waiver of any right or remedy of Agent or the Banks,
or of any default or Event of Default whether now existing or
hereafter arising.
WITNESS the due execution hereof as of the day and year first above
written.
TALON AUTOMOTIVE GROUP, INC. VELTRI METAL PRODUCTS CO.
By: David J. Woodward By: David J. Woodward
Its: Vice President Its: Vice President
COMERICA BANK, as Agent and Bank
By: David Marvin
Its: First Vice President
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ACKNOWLEDGEMENT AND CONSENT
This acknowledgement and consent is executed and delivered by the
undersigned ("Guarantors") in connection with those certain Security Documents
and Guaranties executed by the undersigned, by which the undersigned have
guaranteed payment and performance of obligations and indebtedness under that
certain Credit Agreement dated April 28, 998 ("Agreement") between Talon
Automotive Group, Inc. ("TAG") and Veltri Metal Products Co. ("Veltri" together
with TAG, "Borrowers"), the Banks party thereto, and Comerica Bank, as Agent for
the Banks, and granted Agent, on behalf of the Banks, liens and security
interests as security for the undersigned's respective obligations under their
Guaranties.
1. The undersigned each hereby:
(a) acknowledge and consent to the execution, delivery and
performance by Borrowers of that certain First Amendment to
Credit Agreement of even date herewith between Borrowers,
Banks and the Agent ("Amendment") and to the execution,
delivery and performance of the other documents and
transactions contemplated by the Amendment; and
(b) acknowledge and agree that their respective Security Documents
and Guaranties mentioned above are and remain in full force
and effect with respect to all liabilities under the Agreement
(as amended by the Amendment), and the Documents.
2. Definitions. Capitalized terms used herein and not defined to the
contrary have the meanings given them in the Agreement (as amended by the
Amendment).
Executed as of the 31st day of August, 1998
TALON AUTOMOTIVE GROUP, INC.
By: David J. Woodward
Its: Vice President
VELTRI METAL PRODUCTS CO.
By: David J. Woodward
Its: Vice President
VELTRI HOLDINGS, INC.
By: David J. Woodward
Its: Vice President
VELTRI HOLDINGS USA, INC.
By: David J. Woodward
Its: Vice President
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AMENDMENT TO SECURITY AGREEMENT
This Amendment to Security Agreement is dated as of the 31st day of August,
1998, by and between Veltri Holdings (USA), Inc. ("Company") and Comerica Bank,
in its capacity as Agent ("Agent") under that certain Credit Agreement dates as
of April 28, 1998 by and between Talon Automotive Group, Inc. and certain other
borrowers, Agent and the lenders signatory thereto ("Credit Agreement").
Whereas Company executed and delivered to Agent a guaranty of the payment
and performance of the obligations and indebtedness of the Borrower under the
Credit Agreement ("Guaranty").
Whereas, to secure Company's obligations under the Guaranty, Company
executed and delivered to Agent that certain Security Agreement dates as of
April 28, 1998 ("Agreement"); and
Whereas Company and Agent desire to amend certain provisions of the
Agreement on the terms and conditions hereof:
NOW, THEREFORE, it is agreed:
1. Section 2.1 of the Agreement is hereby amended and restated in its
entirety as follows:
"2.1 The Collateral shall be security for the following described
obligations of Company and all full or part extensions and renewals
thereof (all of which is herein called "Indebtedness"):
a. all liabilities and obligations of Company under the Guaranty
and all present and future amendments thereto:
b. any and all other present and future liabilities and obligations of
Company to Agent or any of the Banks, howsoever evidenced, existing,
arising, or acquired, whether direct or indirect, joint or several,
absolute or contingent, due or to become due, now existing or
hereafter arising; including without limitation all present or future
amendments thereto; and
c. any and all of Agent's costs and expenses (including
reasonable attorneys' fees and legal expenses) incurred in the
preparations hereof, the filing or recording of any financing
statement or other documents, and all of the costs and expenses of
Agent and any of the Banks (including reasonable attorneys fees and
legal expenses) incurred in the protection or preservation of the
Collateral, the collection and/or repossession of the Collateral, or
the enforcement of its rights hereunder.
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Capitalized terms used herein and not defined to the contrary have
the meanings given them in the Agreement.
Except as specifically amended hereby, the Agreement remains in full
force and effect in accordance with its original terms.
VELTRI HOLDINGS (USA), INC. COMERICA BANK, as Agent
By: David J. Woodward By: David Marvin
Its: Vice President Its: First Vice President
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AMENDMENT TO SECURITY AGREEMENT
This Amendment to Security Agreement is dated as of the 31st day of August,
1998, by and between VS Holdings, Inc. ("Company") and Comerica Bank, in its
capacity as Agent ("Agent") under that certain Credit Agreement dates as of
April 28, 1998 by and between Talon Automotive Group, Inc. and certain other
borrowers, Agent and the lenders signatory thereto ("Credit Agreement").
Whereas Company executed and delivered to Agent a guaranty of the payment
and performance of the obligations and indebtedness of the Borrower under the
Credit Agreement ("Guaranty").
Whereas, to secure Company's obligations under the Guaranty, Company
executed and delivered to Agent that certain Security Agreement dates as of
April 28,1998 ("Agreement"); and
Whereas Company and Agent desire to amend certain provisions of the
Agreement on the terms and conditions hereof:
NOW, THEREFORE, it is agreed:
2. Section 2.1 of the Agreement is hereby amended and restated in its
entirety as follows:
"2.1 The Collateral shall be security for the following described
obligations of Company and all full or part extensions and renewals
thereof (all of which is herein called "Indebtedness"):
a. all liabilities and obligations of Company under the Guaranty
and all present and future amendments thereto:
b. any and all other present and future liabilities and obligations of
Company to Agent or any of the Banks, howsoever evidenced, existing,
arising, or acquired, whether direct or indirect, joint or several,
absolute or contingent, due or to become due, now existing or
hereafter arising; including without limitation all present or future
amendments thereto; and
c. any and all of Agent's costs and expenses (including
reasonable attorneys' fees and legal expenses) incurred in the
preparations hereof, the filing or recording of any financing
statement or other documents, and all of the costs and expenses of
Agent and any of the Banks (including reasonable attorneys fees and
legal expenses) incurred in the protection or preservation of the
Collateral, the collection and/or repossession of the Collateral, or
the enforcement of its rights hereunder."
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Capitalized terms used herein and not defined to the contrary have
the meanings given them in the Agreement.
Except as specifically amended hereby, the Agreement remains in full
force and effect in accordance with its original terms.
VS HOLDINGS, INC. COMERICA BANK, as Agent
By: David J. Woodward By: David Marvin
Its: Vice President Its: First Vice President